Net Income of $2.7 Million for the Year; Investment Portfolio Increases 24.2% for the Year; Deposit Increases of 18.6% for the Year; Loan Portfolio Increases 16.3% for the Year

MIDDLETOWN, NY--(Marketwired - January 21, 2015) - Greater Hudson Bank, N.A. (the "Bank") (OTCQX: GHDS), with assets of $394.4 million, today reported net income of $432,000 or $0.04 per common share for the fourth quarter of 2014 compared to $369,000 or $0.04 per common share for the 2013 fourth quarter. For the twelve months ended December 31, 2014, net income was $2.659 million, or $0.27 per common share, compared to $1.540 million, or $0.15 per common share, for the twelve month period ending December 31, 2013. This marks the sixth straight year of profitable operations for the Hudson Valley, N.Y. based Bank.

Return on average common stockholders' equity was 4.14 percent and 6.51 percent for the three and twelve months ended December 31, 2014 compared to 3.70 percent and 3.89 percent for the three and twelve months ended December 31, 2013, respectively.

Edward T. Lutz, President and CEO stated: "We are pleased to report sustained progress in the Bank's operating results as we continue to strive to make Greater Hudson the bank of choice in our core markets of Rockland, Orange and Westchester counties. Our emphasis on access to decision makers and provision of high quality and efficient service has had the desired effect as we continue to add customers to our already strong base of business clientele. We continue to see new and desirable business opportunities and expect to continue expanding our business."

Financial highlights as of December 31, 2014 compared to December 31, 2013 are as follows:

"The Greater Hudson Board is pleased that the strategic direction adopted in late 2013 is continuing to be fruitful," stated Kenneth J. Torsoe, chairman of the board. Mr. Torsoe further stated that, "We are pleased to report that earnings expanded very nicely as compared to 2013 as we were able to resolve one large non-performing loan and sustain a solid expansion in our operating results. This occurred despite the valuation allowance recorded against the Bank's New York State deferred tax asset. Our GREATER team of bankers continues to capably serve existing customers and win new clientele for the Bank through diligence, dedication and hard work. The Bank's entire staff should be congratulated for their efforts."

EARNINGS

*Results Unaudited

Three months Ended

Twelve months Ended

December 31,

December 31,

(in thousands, except ratios)

SUMMARY OF OPERATIONS DATA:

2014

2013

2014

2013

Net interest income

$3,405

$3,015

$12,766

$11,550

Provision for loan losses

148

158

(48)

1,302

Noninterest income

121

172

472

560

Net gains on securities transactions

172

-

716

35

Noninterest Expense

2,087

2,457

8,950

8,454

Income before income taxes

1,463

572

5,052

2,389

Provision for income taxes

1,031

203

2,393

849

Net income

$432

$369

$2,659

$1,540

Efficiency Ratio

59.2%

77.1%

67.6%

69.8%

AVERAGE BALANCE SHEET DATA:

2014

2013

2014

2013

Earning Assets

$369,766

$306,114

$351,724

$301,324

Total Interest Bearing Liabilities

302,649

248,031

288,292

246,441

Net interest spread

3.55%

3.79%

3.57%

3.77%

Net interest margin

3.68%

3.94%

3.63%

3.83%

Results for the three and twelve months ended December 31, 2014 were adversely impacted by a $427,000 valuation allowance recorded against the Bank's New York State deferred tax asset. The valuation allowance arose as a result of changes in the New York State Tax Law enacted in 2014. Based on the changes to the New York State Tax Law, starting in 2015, the Bank does not expect to be taxable for state purposes as a result of the benefit of deductions for lending in the state of New York.

As a result of the increase in income before income taxes and the valuation allowance recorded against the Bank's New York State deferred tax asset, the provision for income taxes increased $828,000 for the fourth quarter of 2014 and $1.5 million for the year compared to the prior year three and twelve month periods, respectively.

The increase in net income for the three months ended December 31, 2014 compared to the three months ended December 31, 2013, is primarily attributable to an increase in net interest income of $390,000 and decreases in non-interest expenditures of $370,000, combined with security gains of $172,000. The increase in net interest income was driven by the growth in the loan portfolio and decreases to non-interest expense resulted primarily from reductions in marketing expenses, salary and commission expenses, and unfunded commitments.

Net income for the twelve months ended December 31, 2014 increased $1.1 million compared to the twelve months ended December 31, 2013. An increase in net interest income of $1.2 million combined with the reduction in the provision for loan losses of $1.4 million and an increase in security gains of $681,000 attributed to the rise in net income. This increase in net income was offset by the increase to the provision for income taxes of $1.5 million and increases in non-interest expenses of $496,000 primarily related to increases in salary, occupancy, FDIC and legal expenditures, and loan expenses. The Bank's marketing expense and reserve for unfunded commitments also declined year-over-year.

BALANCE SHEET & CREDIT QUALITY

SELECTED BALANCE SHEET DATA - Unaudited

(in thousands, except ratios)

Dec. 31,

Dec. 31,

2014

2013

Total Investments

$ 113,104

$ 91,080

Loans, net of unearned income

256,745

220,742

Allowance for loan losses

3,306

3,861

Total assets

394,367

335,787

Total deposits

316,976

267,245

Borrowings

32,313

27,667

Nonperforming assets

2,986

3,666

Allowance for loan losses to total net loans

1.29%

1.75%

Nonperforming assets to total assets

0.76%

1.09%

The Bank increased loans, net of unearned income, by $36.0 million and investments by $22.0 million as of December 31, 2014 compared to December 31, 2013. These increases were primarily funded by an increase in deposits of $49.7 million and borrowings of $4.6 million.

Nonperforming assets decreased to just under $3.0 million as of December 31, 2014 from $3.7 million as of December 31, 2013. The Bank continues to actively attempt to remediate and closely monitor the limited loan relationships that comprise the Bank's remaining non-performing asset balance.

CAPITAL

EQUITY - Unaudited

As of

(in thousands, except ratios)

December 31,

2014

2013

Tier 1 Capital

$ 41,333

$ 39,146

Total Stockholders' Equity

$ 41,532

38,975

Book value per common share

4.14

3.89

Tier 1 Leverage Ratio

10.6%

12.2%

At December 31, 2014, the Bank had $41.5 million in stockholders' equity. The Bank's leverage ratio was 10.6 percent at December 31, 2014 compared to 12.2 percent at December 31, 2013. The Bank continues to be considered a well-capitalized institution under current Federal regulatory guidelines.

Greater Hudson Bank, N.A. founded in 2002, is headquartered in Middletown, New York. The Bank has 5 branches which are located in Middletown, Warwick and Monroe, Orange County, New York, Bardonia, Rockland County, New York, and White Plains, Westchester County, New York. The Bank is chartered by the Office of the Comptroller of the Currency and its deposits are insured by the Federal Deposit Insurance Corporation. Further information can be found on the Bank's website at www.GreaterHudsonBank.com.

Forward-Looking Statements: This Press Release may contain certain statements which are not historical facts or which concern the Bank's future operations or economic performance and which are to be considered forward-looking statements. Any such forward-looking statements are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The Bank cautions that all forward-looking statements involve risk and uncertainties, and that actual results may differ from those indicated in the forward-looking statements as a result of various factors, such as changing economic and competitive conditions and other risk and uncertainties. In addition, any statements in this news release regarding historical stock price performance are not indicative of or guarantees of future price performance.